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Reportable Business Segments | 6 Months Ended
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Jun. 30, 2020
Segment Reporting, Measurement Disclosures [Abstract] |
Reportable Business Segments | We operate in three reportable business segments of the heating, ventilation, air conditioning and refrigeration (“HVACR”) industry. Our segments are organized primarily by the nature of the products and services we provide. The following table describes each segment:
Segment |  | Product or Services |  | Markets Served |  | Geographic Areas
Residential Heating & Cooling |  | Furnaces, air conditioners, heat pumps, packaged heating and cooling systems, indoor air quality equipment, comfort control products, replacement parts and supplies |  | Residential Replacement; Residential New Construction |  | United States Canada
Commercial Heating & Cooling |  | Unitary heating and air conditioning equipment, applied systems, controls, installation and service of commercial heating and cooling equipment, and variable refrigerant flow commercial products |  | Light Commercial |  | United States Canada
Refrigeration |  | Condensing units, unit coolers, fluid coolers, air cooled condensers, air handlers, process chillers, controls, and compressorized racks |  | Light Commercial; Food Preservation; Non-Food/Industrial |  | United States Canada Europe
We use segment profit or loss as the primary measure of profitability to evaluate operating performance and to allocate capital resources. We define segment profit or loss as a segment’s income or loss from continuing operations before income taxes included in the accompanying Consolidated Statements of Operations, excluding certain items. The reconciliation in the table below details the items excluded. Our corporate costs include those costs related to corporate functions such as legal, internal audit, treasury, human resources, tax compliance and senior executive staff. Corporate costs also include the long-term share-based incentive awards provided to employees throughout LII. We record these share-based awards as corporate costs because they are determined at the discretion of the Board of Directors and based on the historical practice of doing so for internal reporting purposes. Any intercompany sales and associated profit (and any other intercompany items) are eliminated from segment results. There were no significant intercompany eliminations for the periods presented. Segment Data Net sales and segment profit (loss) for each segment, along with a reconciliation of segment profit (loss) to Operating income, are shown below (in millions):
| For the Three Months Ended June 30, |  |  |  | For the Six Months Ended June 30, |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
Net sales |  |  |  |  |  |  |
Residential Heating & Cooling | $ | 644.8 |  |  | $ | 689.1 |  |  | $ | 1,086.9 |  |  | $ | 1,154.6 |
Commercial Heating & Cooling | 188.3 |  |  | 261.3 |  |  | 366.7 |  |  | 434.7 |
Refrigeration | 108.2 |  |  | 148.7 |  |  | 211.5 |  |  | 300.1 |
| $ | 941.3 |  |  | $ | 1,099.1 |  |  | $ | 1,665.1 |  |  | $ | 1,889.4 |
Segment profit (loss) (1) |  |  |  |  |  |  |
Residential Heating & Cooling | $ | 127.3 |  |  | $ | 153.4 |  |  | $ | 159.8 |  |  | $ | 240.1 |
Commercial Heating & Cooling | 35.6 |  |  | 53.9 |  |  | 54.3 |  |  | 68.9 |
Refrigeration | 8.9 |  |  | 19.1 |  |  | 9.6 |  |  | 27.5 |
Corporate and other | (18.8) |  |  | (24.1) |  |  | (33.1) |  |  | (36.2) |
Total segment profit | 153.0 |  |  | 202.3 |  |  | 190.6 |  |  | 300.3 |
Reconciliation to Operating income: |  |  |  |  |  |  |
Special product quality adjustments | (1.0) |  |  | (0.5) |  |  | (1.0) |  |  | (0.5) |
Loss on sale of business | — |  |  | 0.4 |  |  | — |  |  | 8.8 |
Partial advance of insurance recoveries related to lost profits | — |  |  | (8.0) |  |  | — |  |  | (8.0) |
Loss (gain) from natural disaster, net of insurance recoveries | 1.0 |  |  | (5.9) |  |  | 2.7 |  |  | (12.8) |
Items in (Gains) losses and other expenses, net that are excluded from segment profit (loss) (1) | 7.0 |  |  | 2.6 |  |  | 6.1 |  |  | 3.9 |
Restructuring charges | 10.0 |  |  | (0.1) |  |  | 10.5 |  |  | 0.4 |
Operating income | $ | 136.0 |  |  | $ | 213.8 |  |  | $ | 172.3 |  |  | $ | 308.5 |
(1) We define segment profit (loss) as a segment's operating income included in the accompanying Consolidated Statements of Operations, excluding: •The following items in losses (gains) and other expenses, net: ◦Net change in unrealized losses (gains) on unsettled futures contracts, ◦Special legal contingency charges, ◦Asbestos-related litigation, ◦Environmental liabilities, ◦Charges incurred related to COVID-19 pandemic, ◦Other items, net, •Loss on sale of business, •Special product quality adjustments, •Partial advance of insurance recoveries related to lost profits, •Loss (gain) from natural disaster, net of insurance recoveries; and, •Restructuring charges.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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